Federal Deposit Insurance Corp. Chairman Martin Gruenberg raised concerns about provisions that would significantly increase the systemic risk threshold for large banks, as well as one that would change the calculation for the supplementary leverage ratio.
The Fed announced Vice Chairman Stanley Fischer will depart in October, giving Trump the ability to rapidly reshape the central bank and target Dodd-Frank Act rules.
The rule limiting the largest U.S. banks’ ability to enter into contracts with early termination clauses is intended to forestall a liquidity crunch if the bank is under stress.
The purpose of the stress tests program is to reassure the public that the banking system is safe, but the stress tests are not an independent assessment of financial institutions’ actual strength.
It would be a pity if our bad collective memory led to an increase in systemic risk in the U.S. regulatory system, with possible international implications, so soon after the crisis.
